Application by Marathon Oil Co. for Waiver of Certain Wellhead Equipment Requirements of 20 AAC 25.200 for Kenai Field wells.

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Conservation Order No. 533

Kenai Field: All Pools

October 4, 2004

IT APPEARING THAT:

1. By letter dated August 8, 2004, Marathon Oil Company (“Marathon”), the field operator, applied to the Alaska Oil and Gas Conservation Commission (“AOGCC” or “Commission”) for waiver of certain wellhead equipment requirements of 20 AAC 25.200 for Kenai Field wells.

2. Notice of opportunity for a public hearing on the application was published in the Anchorage Daily News on August 6, 2004.

3. No request for a hearing was received.

4. No written comments on the application were received.

FINDINGS:

1. 20 AAC 25.200 requires that wellhead equipment include valves and gauges on tubing and all well annuli.
2. An AOGCC field inspection revealed that a number of Kenai Field wellheads are not equipped with valves and gauges on all well annuli, and are thus not in compliance with 20 AAC 25.200.

3. The Kenai Field is a mature gas field in which reservoir pressures have declined substantially since production commenced. Well pressures in the Kenai Field are now low relative to other Alaska fields, ranging from a minimum surface pressure of approximately 100 psi to a maximum surface pressure of approximately 1000 psi.

4. Low pressure in the inner annulus of Kenai Field wells means that there is little risk of overpressuring the outer annulus.

5. Well tubulars in Kenai Field wells are of sufficient burst pressure rating to contain the full range of reasonably anticipated well pressures.

6. The wellheads of many Kenai Field wells were installed in cellars below ground level, making access to the outer annulus difficult and somewhat hazardous.

CONCLUSIONS:

1. Operation of subject Kenai Field wells without valves and gauges will not compromise well control or safety.

2. Where appropriate, during future well workovers Marathon may retrofit Kenai Field wells with equipment sufficient to bring the subject wells into compliance with 20 AAC 25.200.

NOW, THEREFORE, IT IS ORDERED:

1. Pursuant to 20 AAC 25.505, Marathon’s application for waiver of 20 AAC 25.200, requiring valves and gauges on all well annuli, is hereby granted. This waiver applies to the following Kenai Field wells:

KU 34-32

KU 14-32

KU 13-6B

KU 14X6

KBU 23-X6

KBU 31-7RD

KU 31-7X

KBU 24-6

KU 11-17

KU 24-7

KBU 33-7

KBU 11-8

KTU 13-5

KU 24-5RD

KBU 43-6RD

KTU 32-7

KBU 33-6

KTU 24-6H

KBU 41-7X

KBU 44-6

KTU 32-7H

KBU 43-7X

KBU 33-6X

KTU 43-6XRD

KBU 42-07

CLU 1RD

CLU 3

CLU 4

CLU 5

CLU 6

CLU 7

CLU 8

2. Where appropriate, as part of future well workovers, the Commission may require Marathon to retrofit the subject wells with valves and gauges so that the wells comply with 20 AAC 25.200.